Medusa Mining expects to achieve its initial annualised target of 40,000 ounces in the second quarter of 2007 after a landslide in January severely affected production at its Co-O gold mine in the Philippines.

As well as curtailing production the landslide resulted in access to the mine being blocked and electricity for the water pumps being cut while the bottom of the mine was flooded

The bottom 3050 metre level of the mine achieved full operational status in late February following clean up of the mine after the flooding. Full development resumed at the 3050 metre level, however the new 3010 metre sublevel (40 metres below the mine bottom) was affected by flooding until mid-March when sustained pumping lowered the water level sufficiently to permit resumption of development.

In late January excavation of a new by-pass adit commenced to connect with the 3W shaft position providing an improved loop rail system, improved safety and a second adit access to the mine.

The cash cost per ounce increased as a consequence of the reduced ounces but by March 31 approximately 2325 tonnes of ore had been stockpiled.

The 500 tonnes/day ball mill has been successfully commissioned and is being operated on a batch basis for all processing until an average of more than 400 tonnes per day of ore is mined. The 200 tonnes/day circuit will be retained in its entirety as a backup unit.